Internet Companies going down the swanny - MAELSTROM GAMES

[Denzark]

Chaps

I first mentioned Maelstrom the other day. At linky: [url]http://www.lounge.belloflostsouls.net/showthread.php?25224-Problems-with-Internet-Companies-is-GW-causing-supply-problems&highlight=[/url]

Well I phoned - got a store minion who said the organ grinder would phone back. now, I get this in my email:

Hi there,

Here at Maelstrom Games ([url]www.maelstromgames.co.uk[/url]) we have decided to clear as much of our hard-earned stock as we possibly can over the next few days - and therefore generate some much-needed cashflow - in order to ensure we can fulfil the orders that you, our valued customers, have placed over the last few weeks. To that end, we have decided - in consultation with our trading partners - to sell our remaining stock of Battlefront Miniatures (at 25% off), Perry Miniatures, Victrix, Plastic Soldier Company, Artizan Designs, Gripping Beast and Great War Miniatures (all at 30% off). All other ranges' stock will now be sold at 40% off UK RRP - we hold good stocks of Gamezone Miniatures, Dark Age, Cool Mini or Not and Scibor Miniatures, and there's a fair bit of Privateer Press and Malifaux left too. As well as that, from this moment onwards we have decided to stop any customer from placing orders for items that are not in stock, simply so that we can clear the orders that have already
been placed.


A FEW DETAILS
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We have not made this decision lightly, and please note that we have absolutely no issues with any of the above manufacturers or suppliers; we are simply trying to sell off stock in order to clear older orders and ease any worries our customers may have regarding the speculation that is currently rife on the internet. As well as that, we believe that our retailing model must now change to selling products that are in stock at the time of purchase, and as such that will continue to be in place in the future, once our orders are cleared and our stock is sold.

I would ask all of our customers to remain as patient as they can with Maelstrom Games and, indeed, our staff, for we will use the money generated by the sale of our stock to ensure all of your orders are fulfilled in their entirety as quickly as possible. We remain committed to servicing our customers first and foremost and will continue to do so in the future.


Red being their text. So, as I never go on the other sites, what speculation is rife? What is going down at Maelstrom? Will I ever get my Valkyrie ya bass? Due to the change in circumstance I decided this was news or rumour hence re-post.

[magickbk]

This sounds pretty bad. I read this as: We don't have any cash on hand, and we're up to our credit limit, so we've been taking your money and using it to order products for customers who already ordered previously, and we'll fulfill your order as soon as someone gives us some money that we can use to order it.

[Gotthammer]

PX40k has [URL="http://px40k.blogspot.com.au/search/label/maelstrom%20games"]a good summary and theory of what's been going on[/URL], with a link to a thread on Dakka if you're so inclined.

[Denzark]

Gotty thanks for the news. It would seem from the linkys I am about to get stiffed.

Luckily this was payapl for me - so I have raised a dispute. My comments in the claim:

Dear Maelstrom I have started this dispute because of your last email. Having used your webform and you blamed GW, I phoned. I was told I'd get a phone call back. Nothing.I now see you email saying you will have a sale to enable you to raise cash to clear back orders. WRONG! You will use my money to buy what I paid for, not wait for a giant ponzi scheme to materialise.I hope I get my order and you are still good and this is a glitch. However if not and if you have been economical with the truth (if not your business model) I wish a pox on you. Let me know, Ta ta

However surprised this is not counted as news on BoLS front page - considering some of the 2 reply Warmahordes articles they will post. Is there not many Maelstrom users here?

[ElectricPaladin]

I'm really glad that I read this thread in its entirety. I was all "Woo! Stuff on sale!"

And then I finished the thread.

Yeah... not gonna happen.

[daboarder]

ouch wonder why? none of the other wholesalers are having problems as far as I'm aware.

[Denzark]

btw I'm not being what I understnad my colonial cousins might call an arsehat because thats how i repay loyal service. I have done this they have macked me off like a kipper in relying to my written query, not done what they said ie phone, and now have the temerity to hold a sale and state the proceeds will clear the backlog.

They have my guinea, I'll have my goods or their souls at grass before breakfast.

[inquisitorsog]

ouch wonder why? none of the other wholesalers are having problems as far as I'm aware.

If they had too big of a sale and people jumped on them, then on top of it misjudged what the sale would cost them, they could end up in trouble. Or, if their brick and mortar is hurting and cutting into profitability other trouble could be ensuing.

I am suspicious whenever I see anyone other than Amazon offering products for steep discounts AND free shipping on all orders. I've worked in mail order a long time ago and just the cost of boxes is a significant overhead. That's why you see a lot of these small shops shipping product in strange boxes. I buy from one that regularly ships in boxes that were previously used for medical supplies. I assume they're getting boxes that were headed for a recycle bin from a relative that works at a hospital or medical supply company or they're located next to one.

This is also a time of year a lot of retailers try to liquidate stale inventory so they can free up cash to buy up fresh (likely to sell) inventory ahead of Christmas. That doesn't seem to be the case here, but it's worth mentioning so no one panics if they see their favorite running a liquidation.

Using a cash account is always a bad idea when buying online. Credit cards have an invulnerable save that cash accounts don't have.

[Maine]

TheWarstore and MiniatureMarket have also recently done fairly hefty inventory clearance sales. However, both MM and Warstore only sell in-stock products.

It definitely sounds like Maelstrom ended up with some expense that exceeded their on-hand savings, but this isn't a pyramid scheme or ponzi scheme (at least not by the actual definition). Just poor business decisions or unfortunate circumstance.

Consider the scenario:

Imagine your company has $500 in the bank, and $2000 (your retail value) in stock on hand. You take orders for $600 (your cost) worth of product, which customers pay $800 for. You now have $1300 in the bank. $200 (your cost) of product is in your inventory, which you draw from, leaving $400 (your cost) to order.

Normally, all is well and good - you will order the items, pay for them on receipt or on account, and all is good.

Now lets alter the scenario:

Suddenly you have an unavoidable expense (tax bill, legal fee, etc) of $1000. If you do not cover this bill you will be out of business, able to cover those previous orders but then ceasing operations (unless failure to pay this amount immediately will inhibit even that). You pay that, and now you only have $300 to purchase $400 worth of product to fulfill orders... you now need to play catch-up.

Another example scenario - what if GW just shipped you 50 Tau Codexes with your order of 10 6th Ed Rulebooks. The shipment is COD, so you have to pay the extra ~$1000 or the order goes back, and you won't have any product for launch. This actually happened to a local (brick and mortar only) shop...

Liquidating physical stock is the best way to do it, but in a shortfall situation like this it's possible - for a VERY short time, on the assumption that sales will continue and you can make up the shortfall quickly - to use new sales proceeds to fulfill previous orders. It's risky business, but if the sales are anticipated to remain strong enough to catch up soon and you do not significantly delay orders, customers won't notice and you can recover. It sounds like Maelstrom games may have chosen the wrong strategy, fallen too far behind. They should have begun liquidating excess stock as soon as the problem occurred, even if it's at a loss.

[PierceC]

I think that most likely this has little to do with stock or cash flow problems, but like many companies they tried and expansion, utilised a lot of on hand capital, and then when that acquisition didn't pan out it hurt their core business. I am thinking Barclays - ABN Amro, and many other banks.

I think in the last 6 month, Maelstrom opened a massive gaming centre. Obviously that gaming centre has not attracted the numbers or volumes they thought it would and now they are struggling. I would say that it doesn't always end badly as MiniaturesByPost, now known as Dark Sphere, opened a medium sized gaming centre and that I think has actually increased their sales.